Amazon launches inaugural sustainability bond, priced at $1bn

Image: Amazon

Announced late on Tuesday (11 May) through a blog post on the Amazon website, the bond’s proceeds will be used to finance initiatives across five focus areas: renewable energy, clean transport, sustainable buildings, affordable housing and socio-economic empowerment.

On renewable energy, Amazon has committed to reaching 100% renewable electricity across all direct operations globally by 2030 and claims it is likely to achieve this milestone in 2025.

On clean transport, the retailer’s overarching commitment is to ensure that 50% of all shipments are net-zero by 2030. Actions to date have included increasing bio-based sustainable aviation fuel (SAF) procurement and procuring thousands of electric vehicles (EVs) from brands including Mercedes-Benz, Rivian and Mahindra Electric.

Both of these targets underpin Amazon’s overarching, longer-term target to reach net-zero by 2040. This target is known as Amazon’s ‘Climate Pledge’ and, in partnership with Global Optimism, the corporate has encouraged a string of more than 100 other businesses to make the same pledges.

The ways in which the bond financing will support these targets, plus Amazon’s social sustainability aims, will be determined through a new ‘sustainability bond framework’ from the businesses. The framework outlines which projects are eligible and which UN Sustainable Development Goals (SDGs) they contribute to, while also touching on how green finance from one business can create a “ripple effect”, enabling broader decarbonisation.

“Amazon continues to stimulate investment in the development of green technologies and low carbon products and services that will enable companies of all sizes to decarbonise their operations,” the firm’s blog reads.

The new sustainability bond framework notably will not apply to all of Amazon’s bonds. The business issued a total of $18.5bn of debt this week – the largest in its history.

Green bond boon

Following the issuance of $378bn of bonds branded as “green” or “sustainable” in the first quarter of 2021, Nordic bank SEB believes that issuance is likely to exceed $1trn by the end of the year.

A similar forecast from the Climate Bonds Initiative has stated that the market for green, sustainability and social bonds is likely to pass the $1trn mark this year.

Businesses to have issued such bonds in recent months include Body Shop owner Natura & Co,  Whitbread, Mercedes Benz’s parent company Daimler and Mastercard

Sustainability-linked loans are also becoming increasingly commonplace. 2021 has seen major announcements from the likes of AB InBev, Thai Union and Tesco.

Building on this trend, Russian petrochemical giant SIBUR this week signed for a $50m loan with interest rates dependent on progress towards climate, water and recycled materials targets. Issued by UniCredit, the loan is believed to be the first of its kind for this sector and nation.

SIBUR’s managing director for economics and finance Peter O’Brien said the loan is a “logical next step” to the business’s evolving ESG approach. “ESG considerations and priorities are driving strategy formulation and factor into everything we do, all the way from production to financing decisions,” he added.

Similarly, UK retailer Joules Group this month announced a £25m revolving credit facility with Barclays Bank, which has margins linked to the delivery of Joules’ ESG ambitions. Topics covered are reducing carbon emissions on an intensity basis, reaching 100% sustainable materials and engaging employees with the ESG agenda.

Joules’ chief financial officer Marc Dench said: With growth comes responsibility. The decision to link this financing to our ESG focus areas reflects the Group’s stated commitments to create value for all stakeholders by reducing its environmental footprint and positively impacting the people we work with, the communities we’re based in, and the world around us.”

Sarah George

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